Saturday, October 15, 2011

Court orders Qualcomm to provide Apple with documents for its worldwide defenses against Samsung

This week, Apple was on a winning streak against Android in general and Samsung in particular. Samsung doesn't seem likely to be able to win injunctions against Apple's products while Apple won a preliminary injunction in Australia and may win one in the United States. I now found another decision in Apple's favor, but prior to that I'd like to comment on the status of the proceedings in Australia and the United States:

The Australian decision is technically far broader than any win Apple has scored so far anywhere else in the world, including whatever might come out of its preliminary injunction motion in the United States. But the decision is only preliminary (it could be as early as in a few months), and Apple only had to meet a relatively low standard with a view to its likelihood of prevailing in the full-blown main proceeding. Here's a passage from the ruling:

"The requirement of a 'prima facie case' does not require Apple to show that it is more probable than not that it will succeed at trial. Apple needs to show that it has a sufficient likelihood of success."

To compare this with U.S. law, the quoted expression "more probable than not" is synonmyous with "more likely than not", which is also known in the U.S. as "preponderance of the evidence" (see the last sentence on this page of the official uscourts.gov website). The preponderance standard is moderately high. It is lower than the "clear and convincing evidence" standard, let alone the "beyond reasonable doubt" standard. And in Australia, it seems that a preliminary injunction doesn't even require a plaintiff to meet the preponderance standard: the "sufficient likelihood of success" standard is even lower.

In addition to a sufficient likelihood of success, Apple also had to convince the Australian judge that the "balance of convenience" was in its favor, meaning that Apple would suffer greater harm if the injunction had been denied than Samsung will now that it has been granted. The judge found "the 'balance of convenience' is marginally in [Apple's] favour".

In other words, Samsung is still breathing in Australia, but it will need to strengthen its case significantly in order to get a more favorable outcome at the end of the full-blown proceeding.

It would have been unusual for the judge in California to indicate a strong inclination to grant Apple a preliminary injunction. Courts generally try to have at least some pressure on both parties to settle. There's a significant likelihood of the court shying away from a preliminary injunction over doubts concerning the validity of Apple's asserted design patents or maybe based on a hardship analysis, but Apple has already made significant headway: the judge believes Samsung infringes those design-related rights. The trial is scheduled for next summer, so even if Apple didn't win a preliminary injunction, it wouldn't have to wait long to have a chance to win a permanent one.

In addition to the Australian and Dutch decisions and the infringement finding at the hearing in Northern California, Apple also got good (though widely expected) news from Southern California, where a federal court granted Apple's motion to obtain documents from Qualcomm that may help fend off Samsung's infringement allegations in other jurisdictions around the globe in which Apple wouldn't have the same access to those documents as in the United States with its extensive discovery rules. The LitigatingApple blog reported on Apple's motion. Apple wants those documents in order to prove that Qualcomm is licensed to Samsung's patents, and since the iPhone 4S and some other Apple products use a Qualcomm chip for their baseband functionality, this would provide Apple with a patent exhaustion argument: even if Samsung could prove that the patents are valid and infringed, it couldn't "double-dip" since Qualcomm already pays it.

Samsung opposed the motion, but on Thursday, the court agreed with Apple that Qualcomm should furnish those documents:

"Samsung objects to the application, arguing the subpoena is unnecessary because Apple can obtain the documents directly from Samsung in discovery in the foreign proceedings. However, the Court has no assurance the evidence would be available in each of the foreign venues in which Samsung is pursuing litigation. In addition, Apple's application sufficiently outlines the relevance of the evidence sought. There is nothing at this point that leads the Court to believe Apple's request is a 'fishing expedition' or intended to be a vehicle for harassment. Therefore, the Court GRANTS Apple's application.

IT IS HEREBY ORDERED that Apple is granted leave to issue a subpoena for documents in substantially the form as attached to the Application, directing Qualcomm to produce the documents requested in the subpoena at the offices of Merrill Corporation, 8899 University Center Lane, Suite 200, San Diego, CA 92122, or another location mutually agreeable to Apple and Qualcomm."

Qualcomm could still try to "quash" this, but I doubt that Qualcomm is opposed to providing this material. I guess Qualcomm just needed Apple to obtain a court order so that Qualcomm could provide its contract with Samsung in spite of confidentiality obligations.

Apple will use the requested documents "in Germany, Japan, the Netherlands, South Korea, France, Italy, the United Kingdom, and Australia".

This represents an additional -- and significant -- hurdle for Samsung's counterclaims and countersuits against Apple around the world. The Dutch decision (handed on Friday) shows that Samsung may not win injunctions based on patents it has to license on FRAND terms. If Apple can indeed prove that Qualcomm is properly licensed, then that's another reason for courts to deny Samsung an injunction, and it would even preclude Samsung from charging Apple any royalties with respect to products incorporating Qualcomm's baseband technology.

Apple previously won a similar decision with respect to Samsung's license agreement with Intel. Here's quote from Apple's reply to Samsung's opposition to the Qualcomm-related motion:

"On July 20, 2011 Apple filed a section 1782 Application in the Northern District of California seeking issuance of a subpoena to Intel for documents relating to a license agreement between Samsung and Intel, another supplier of chips used in the Apple accused products. [...] The information and/or documents obtained through Apple's subpoena to Intel have already been submitted in several foreign proceedings; therefore, it is likely that these same foreign tribunals would be receptive to documents obtained through Apple's present 1782 Application."

It remains to be seen how the courts agree that Samsung licensed the relevant patents to Intel and Qualcomm, but if that's the case, Samsung will have to come up with a whole new strategy.

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About Me

Florian Mueller is a former award-winning intellectual property activist with 25 years of software industry expertise spanning across different market segments (games, education, productivity and infrastructure software), diverse business models and a variety of technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof.) He is now developing a game app for smartphones and tablet computers.